What is Indemnity Health Insurance?

Indemnity health insurance is medical expense insurance issued by a commercial insurer. This type of protection provides a reimbursement of medical expenses incurred by the insured. A medical expense or indemnity health insurance plan is the most expensive type of health insurance that is available to an applicant. This type of protection also offers greater flexibility in terms of acquiring medical services than fee-for-service and prepaid plans such as HMOs, PPOs and Blue Cross/Blue Shield Associations.

Characteristics of Indemnity Plans

The characteristics of a medical expense or indemnity health insurance plan include deductibles, coinsurance requirements, stop-loss limits and maximum lifetime benefits. A deductible is the amount that is paid by the insured before the insurance company pays benefits. Coinsurance requirements create a cost sharing of the expense between the insured and insurance company. An insured’s maximum out-of-pocket expense is limited by the stop loss limit. The maximum lifetime benefit is the cap on all expenses paid by the insurance company.

Types of Indemnity Health Insurance Plans

The types of indemnity health insurance plans on the market include basic medical expense plans. These policies include basic hospital and basic surgical plans. They also include major medical expense plans, supplementary major medical expense and comprehensive major medical expense plans.

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